Papers by Marina Kudinska
Contemporary studies in economic and financial analysis, Oct 28, 2016
Global economy, growing importance of innovations as well as wide use of technologies have change... more Global economy, growing importance of innovations as well as wide use of technologies have changed the banking business worldwide. Financial technologies (FinTech) have become an integral part of banking, and nowadays banks have started to compete beyond financial services facing increasing competition from nonfinancial institutions providing, for example, payment services. Start-up service providers, search engines, and social networks have expanded their services “interfering” in the fields traditionally covered by banks. The rapid rise of FinTech has changed the business landscape in banking asking for more innovative solutions. These recent tendencies require the banks to increase investment in FinTech, rethink service distribution channels, especially the business-to-consumers models, increase further standardization of back-office functions, etc. Some members of the financial services industry see the boom in FinTech as a threat to traditional banking industry. Others believe that FinTech has become a challenge that can be turned into an opportunity as it provides more flexibility, better functionality in some areas, and aggregation of services. The aim of the paper is to analyze the recent trends in banking, identifying opportunities and risks of FinTech for banks. A timely integration of FinTech into business allows banks to get an advantage in growing competition. This paper provides an extensive analysis of recent trends in FinTech and banking, examining experience of leading European and US banks, as well as surveys conducted among members of the financial services industry in different countries. The authors have studied the development of the financial innovation and technology market, assessed the existing practices applied in the field of FinTech, identified the main risks related to development of FinTech and financial innovations the banks are exposed to on the micro- and macrolevel. The paper provides recommendations for regulators and banks to ensure reduction of risks associated with development of FinTech. Analysis of FinTech market has shown growing competition, including from nonfinancial institutions. The paper provides practical recommendations to commercial banks for strengthening the position in financial innovations and controlling the risks associated with introduction of financial innovations.
Financially strong, trustworthy and reliable banks form the basis of every economy and are a vita... more Financially strong, trustworthy and reliable banks form the basis of every economy and are a vital precondition for the stable economic development of every country. The financial health of banks is important for different stakeholders, including bank clients, correspondent banks, state and others. Therefore, lack of appropriate measures for bank financial health can cause a number of risks for the bank stakeholders. Traditionally the assessment of bank financial health and reliability is done by the international rating agencies as Standard & Poor's, Moody's and Fitch. These ratings are widely recognized worldwide; however, due to different reasons ratings assigned by the international rating agencies historically are not available for the majority of European banks. Besides, after the global financial crisis of 2008 the number of banks with a rating by an international rating agency has substantially decreased. Therefore, the aim of the paper is to design a model allowing to assess bank financial health using publicly available information. The proposed model is based on the analysis of financial statements data of Latvian commercial banks in the period from 2003 till 2017, key macroeconomic indicators, and aggregate statistical data of Latvian commercial banks managed by the Financial and Capital Market Commission (FCMC). The methodology is based on the design of multiple choice model ordered logit using eViews 7.0. The paper determines the main factors affecting the bank financial health based on the Moody`s Investors Service Long Term Bank Deposit Ratings. According to the developed model, the main factors involve bank assets structure, level of credit risk, profitability, bank capitalization, stability of resource base as well as macroeconomic factors, including investment and unemployment.
Humanities and Social Sciences. Latvia, Dec 20, 2022
The importance of operational risk management in the bank increases every year. Banks need to tak... more The importance of operational risk management in the bank increases every year. Banks need to take actions to prevent fraudulent activities, minimize errors in transactions, automate processes and improve data security. Ignoring operational risk procedures or failure to implement suitable control mechanisms could lead to unexpected losses, unsatisfied customers, and potentially regulatory sanctions, all of which could seriously harm bank's reputation in a highly competitive market. A specific focus is on payments and security transactions, as they are linked to the biggest risks. Any regulatory driven project failure or IT project failure in the bank, insufficient project governance, failed implementation of a new system or failure in external data sources can lead to even bigger losses. After a review of the Basel Framework and the new set of standards of the upcoming changes to take effect as of 2023, the aim of this article is to elucidate the changes related to operational risk capital in banks and to ascertain the weakest points in operational risk management. Therefore, this topic is timely relevant, as the aim of the research is to manifest the possible changes withing operational risk management in banks, by gathering and analysing empirical evidence. This article is based on academic research and professional experience. The methods used in the research are comparison, generalization and graphical illustration of statistical information, identification of the main idea of regulatory frameworks and legal documentation. The main results and findings of the research are that banks will need to rethink the strategies of their capital management and this article emphasizes the importance of a redesigned approach towards operational risk assessment in Basel III and substantiates the efficiency of the proposed framework. With Basel III, each loss may cause more challenges, as will be considered twice, as the direct impact on profit/loss and direct impact on future operational risk capital. Another finding is that the biggest amounts of losses are related to corporate items events and according
Separate summary in Latvian and English, 76 p.Available from Latvian Academic Library / LAL - Lat... more Separate summary in Latvian and English, 76 p.Available from Latvian Academic Library / LAL - Latvian Academic LibrarySIGLELVLatvi
University of Latvia, 2019
Financially strong, trustworthy and reliable banks form the basis of every economy and are a vita... more Financially strong, trustworthy and reliable banks form the basis of every economy and are a vital precondition for the stable economic development of every country. The financial health of banks is important for different stakeholders, including bank clients, correspondent banks, state and others. Therefore, lack of appropriate measures for bank financial health can cause a number of risks for the bank stakeholders. Traditionally the assessment of bank financial health and reliability is done by the international rating agencies as Standard & Poor's, Moody's and Fitch. These ratings are widely recognized worldwide; however, due to different reasons ratings assigned by the international rating agencies historically are not available for the majority of European banks. Besides, after the global financial crisis of 2008 the number of banks with a rating by an international rating agency has substantially decreased. Therefore, the aim of the paper is to design a model allowing to assess bank financial health using publicly available information. The proposed model is based on the analysis of financial statements data of Latvian commercial banks in the period from 2003 till 2017, key macroeconomic indicators, and aggregate statistical data of Latvian commercial banks managed by the Financial and Capital Market Commission (FCMC). The methodology is based on the design of multiple choice model ordered logit using eViews 7.0. The paper determines the main factors affecting the bank financial health based on the Moody`s Investors Service Long Term Bank Deposit Ratings. According to the developed model, the main factors involve bank assets structure, level of credit risk, profitability, bank capitalization, stability of resource base as well as macroeconomic factors, including investment and unemployment.
Polish Journal of Management Studies, 2016
The article proposes a model of credit risk assessment on the basis of factor analysis of retail ... more The article proposes a model of credit risk assessment on the basis of factor analysis of retail clients / borrowers in order to ensure predictive control of the level of risk posed by potential clients in commercial banks engaged in consumer lending. The aim of the study is to determine the level of risk represented by different groups (classes) of retail clients (borrowers) in order to reduce and prevent credit risk in the future as well as to improve the management of banking risks. The main results of the study are the creation of a model of borrowers' internal credit ratings and the development of the methods of improving credit risk management in commercial banks.
EUROPEAN RESEARCH STUDIES JOURNAL, 2018
Changing regulation and business environment as well as development of information technologies i... more Changing regulation and business environment as well as development of information technologies in finance is rapidly modifying the financial services industry. This consequently puts the financial services industry under additional pressure and constant growing competition from the financial sector participants, from large technology companies such as Google, Apple, Facebook, Amazon, from large FinTech companies such as PayPal, Moven, TransferWise, mobile network operators and other existing and potential market players. The implementation of the new EU Payment Service Directive (PSD2), which allows non-financial companies to provide access to financial services for bank customers, is expected to disrupt the financial services industry as we know it, and make traditional financial services providers and banks, in particular, think of new creative business models to remain competitive. In the process of doing this, changing the landscape of payments and creating new risks for banking business. With this study we aim to assess the new EU Payment Service regulation in the context of industry competitiveness. The study is based on the examination of the PSD2 Directive exploring the opportunities as well as the risks that it will bring to this industry in the near future, and the possibilities of cooperation of the financial services industry with financial technology developers. Moreover, we analyse structured data, collected from a questionnaire based on 4 themes of perception of techs on the importance they have on ensuring competitiveness, conducted with European tech companies. Most of the questionnaire participants believe that the Payment Services Directive 2 will promote competitiveness, innovations and development. Moreover, findings show that comparativeness is related mainly to low costs and customer satisfaction. However, it is also shown that high quality of products/services as well as relatively high speed of transactions and security, privacy and risk are also perceived as important.
Contemporary Studies in Economic and Financial Analysis, 2016
Global economy, growing importance of innovations as well as wide use of technologies have change... more Global economy, growing importance of innovations as well as wide use of technologies have changed the banking business worldwide. Financial technologies (FinTech) have become an integral part of banking, and nowadays banks have started to compete beyond financial services facing increasing competition from nonfinancial institutions providing, for example, payment services. Start-up service providers, search engines, and social networks have expanded their services “interfering” in the fields traditionally covered by banks. The rapid rise of FinTech has changed the business landscape in banking asking for more innovative solutions. These recent tendencies require the banks to increase investment in FinTech, rethink service distribution channels, especially the business-to-consumers models, increase further standardization of back-office functions, etc. Some members of the financial services industry see the boom in FinTech as a threat to traditional banking industry. Others believe that FinTech has become a challenge that can be turned into an opportunity as it provides more flexibility, better functionality in some areas, and aggregation of services. The aim of the paper is to analyze the recent trends in banking, identifying opportunities and risks of FinTech for banks. A timely integration of FinTech into business allows banks to get an advantage in growing competition. This paper provides an extensive analysis of recent trends in FinTech and banking, examining experience of leading European and US banks, as well as surveys conducted among members of the financial services industry in different countries. The authors have studied the development of the financial innovation and technology market, assessed the existing practices applied in the field of FinTech, identified the main risks related to development of FinTech and financial innovations the banks are exposed to on the micro- and macrolevel. The paper provides recommendations for regulators and banks to ensure reduction of risks associated with development of FinTech. Analysis of FinTech market has shown growing competition, including from nonfinancial institutions. The paper provides practical recommendations to commercial banks for strengthening the position in financial innovations and controlling the risks associated with introduction of financial innovations.
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Papers by Marina Kudinska